Union Budget 2023: Will Blockchain-Based Digital Currency Come Of Age?

New Delhi:

Central Bank Digital Currency or CBDC has captured the imagination of central banks around the world. Recently, the Reserve Bank of India (RBI) launched a pilot ‘digital rupee’ project and reports suggest that it may further expand the project “based on learnings from the current pilot”.

Governor Shaktikanta Das’s recent statement on CBDC adoption indicates that the ‘digital rupee’ may get a boost.

“Digital currencies issued by central banks are the future of money, and their adoption can help save on logistics and printing costs,” he said at a recent event.

With the Union Budget round the corner, industry watchers are expecting some announcement regarding the digital rupee.

“I think CBDCs will be a hot topic of discussion in this year’s budget,” says Kamlesh Nagaware, CTO of blockchain firm Snapper Future Tech. He believes that Finance Minister Nirmala Sitharaman may announce measures for CBDC to enable offline, cross-border payments and digital asset ecosystem.

The Government of India has been a supporter of CBDC. In her last budget speech, Ms Sitharaman said the digital rupee would lead to a more efficient and cheaper currency management system.

For the uninitiated, a CBDC is a digital version of a fiat currency backed by a central bank. They are very often supported by blockchain technology, as is the case with the digital rupee.

Amogh Tiwari, founder of DeFi, an NFT-based financial utilities company, believes, “In the CBDC testing phase, 16,000 users made e-rupee transactions in a month. The start is excellent and there is a lot of potential for the future of e-rupee.” Huh.” ,

Experts believe that blockchain is likely to gain momentum in the coming years, with the Ministry of Electronics and Information Technology coming out with a ‘National Strategy on Blockchain’ in December 2021. Interestingly, the report mentions the idea of ​​a government-backed digital currency. Wallet for transactions in agriculture sector.

“We expect a fair allocation in this year’s budget for blockchain and its application on Indian infrastructure like cargo, finance, digital documents etc,” says Mr Tiwari.

CBDC is one of the most well-known use cases of blockchain technology, which is considered to be secure, trustless and transparent. However, any discussion on CBDCs is incomplete without comparing them with cryptos, which also run on the principles of blockchain.

With the governor of the Reserve Bank of India calling crypto currency “nothing but gambling” and the finance minister seeking an outright ban and international cooperation for crypto regulation, the future of the Indian crypto market hangs in the balance.

“There is no correlation between crypto and CBDC. The government will look at the latter as an option,” says Mr. Nagavare. Mr. Tiwari also speaks on the same lines and says that the CBDC represents an important step in the adoption of blockchain.

Both believe that the digital rupee will help in mass adoption and mainstreaming of digital currencies in general across the country. “E-rupee will help in creating stronger regulations as the government and stakeholders can have a comprehensive understanding of digital currency and digital assets,” says Mr Nagavare.

According to one estimate, the adoption of digital assets such as CBDCs and other blockchain-backed assets could help India add $1 trillion to its economy by 2032.